Sunday, January 23, 2011

Is Ian Fletcher a Bad Person or Merely a Bad Economist?

Self-avowed protectionist Ian Fletcher has decided to pick a (rather nerdy, admittedly) fight with GMU economics professor and Cafe Hayek blogger Don Boudreaux about free trade. After getting dressed down in several of Boudreaux's "open letters," Fletcher has fired back in a new blog entry at the Huffington Post. This time, however, Fletcher skips the economic or moral arguments and instead opts for the truly high-brow approach of, err, jingoistic name-calling:

Libertarianism, the New Anti-Americanism

Sometimes the bad guys do us all a big favor, by openly stating what they stand for after spending years denying it. I recently received exactly this sort of favor from an economist, one Don Boudreaux, at the renowned libertarian Cato Institute, a hotbed of free-trade thinking. He wrote:

Why should you or I celebrate less an improvement in the welfare of a South Korean than we celebrate a comparable improvement in the welfare of a South Carolinian? (original here)

That's it. So finally we have it: after years of telling us that libertarian economics -- deregulate this, deregulate that, believe that the free market is always right -- is best for America, they admit that, in the end, they just don't care.

This philosophy has the perverse virtue of perfect logical consistency: if you don't care about what's good for Americans, why not have free trade? I must grant -- and the reader should, too -- that the entire policy of free trade makes perfect sense if one adopts this premise.

The idea of caring equally about the well-being of people all over the world sounds, of course, like a very sweet and humanitarian philosophy. And in a perfect world, maybe it would be. But there are two very big realities that get in the way:

1) We live in a world of ruthless economic rivalry, so if Americans aren't willing to stand up for the economic interests of Americans, we just get rolled by multinational corporations and foreign powers that lack such delicate qualms.

2) Libertarianism, for all its pretensions of universalist humanitarianism, is in fact a notoriously selfish philosophy. Someone once defined a libertarian as "an anarchist with a credit card;" they were onto something.

The South Korea Free Trade Agreement, America's largest free-trade agreement since NAFTA, is back on the front burner. So when the libertarians speak up on this issue, as they will, just remember where their hearts are.

Sigh. Don's a big boy and certainly doesn't need little ol' me to defend him, but, being a libertarian myself, I have a small dog in this fight and, well, just can't help myself. For the moment, let's ignore the obvious failings of Fletcher's actual "arguments," such as the fact that--

Fletcher totally misunderstands (or intentionally misstates?) Boudreaux's post, which, as even Cletus the slack-jawed yokel could grasp from a quick skim, clearly shows that Boudreaux believes that free trade greatly benefits Americans through increased wealth, better returns to capital and thus more investment, higher productivity and real wages, and (perhaps) lower income inequality, and that free trade also benefits workers in poor countries (hence, the selectively-quoted comment about South Koreans and South Carolinians).

Even if Fletcher's characterization of Boudreaux's statement were correct (and it's clearly not), that would obviously make Boudreaux and other libertarians ambivalent about America, not "anti-American"; and

Even a dumb lawyer like me can see that modern global supply chains have made "a world of ruthless economic rivalry" a thing of the distant past, and that trade (i.e., voluntary, mutually beneficial exchanges) has never, ever been a zero sum game. (This, by the way, is the entirety of Fletcher's "economic argument" in his eight HuffPo paragraphs.)

So, take away these clearly erroneous parts of Fletcher's statement, and you're left with the following brilliant insights:

Libertarianism is the new Anti-Americanism. Don Boudreaux and other libertarians are "bad guys" who "just don't care" and follow a "notoriously selfish philosophy" of deregulation and free markets. They're pretty much "anarchists with a credit card," and their hearts are clearly in the wrong place. So remember that when they "speak up" about the US-Korea FTA.

Wow. So, other than a brief and conclusory statement about "ruthless" international competition, Fletcher's blog entry is nothing more than a long string of jingoistic insults. I mean, I knew the Huffington Post didn't exactly have the highest editorial standards in the world, but if this steaming pile of substanceless nonsense is the sort of thing that qualifies as "publication-worthy content" over there, then I imagine virtual poo-flinging can't be far behind.

But, hey, I guess when you're a protectionist and your economic arguments get repeatedly crushed by Boudreaux and others (including AEI's Mark Perry) and you utterly whiff on the libertarian critiques of your protectionism's obvious moral failings, then you go attack libertarians' intentions and their character. Very classy! Of course, when faced with the opportunity to impugn Fletcher's intentions/character, Boudreaux actually did the exact opposite and defended Flecther in the comments section of one of his earlier blog posts:

There's no reason to believe that Mr. Fletcher is insincere; no reason to think that he's writing and saying what he writes and says simply because someone is paying him to issue the opinions and 'analyses' that he issues. I'm pretty confident that he sincerely believes that the intellectual and moral cases for free trade are weak, or at least much weaker than people such as Russ, myself, Doug Irwin, Dan Griswold, and the like believe these cases to be.

(I actually said something similar in the comments section of one of Perry's entries.) Fletcher, on the other hand, apparently has no such reservations and has little problem essentially saying that Americans should doubt libertarians' intentions and beliefs because we are, in essence, bad people who hate America.

Seriously.

British writer and poet Samuel Johnson once famously said that "patriotism is the last refuge of scoundrels." Historian James Boswell wrote that Johnson wasn't denouncing "a real and generous love of country, but that pretended patriotism which so many, in all ages and countries, have made a cloak of self-interest." After reading Fletcher's latest baseless diatribe against Boudreaux and other libertarians, one must wonder whether Fletcher, in one short blog post alleging the "anti-Americanism" of his opponents, has quickly revealed himself as a true scoundrel rather than just a poor, misguided economist.

(More classy libertarian critiques of Fletcher's economics, rather than his intentions or "heart," can be found here and here. And these were done after Fletcher's ad hominem attack!)

14 comments:

I understand the general logicality of free trade under the operating assumption of a stateless society. Unfortunately, there is no stateless society. So why is Mr. Fletcher's concerns about the government's treatment of American businesses ridiculed here? It's an eminently practical concern, especially since politicians are supposed to be in the business of protecting business interests.

Furthermore, since no governmental policy can be perfectly neutral (another reason to not have the state, in my own opinion), why would it not be preferable to favor national interests?

Understand that my own biases are to have as free and neutral a trade possible as possible. Although, in the event the state has to show preference one way or the other, I would prefer that preference be given to fellow citizens, as jingoistic as that sounds.

1) Politicians are not "supposed to be in the business of protecting business interests." They're supposed to represent the interests of their constituents (all of whom are consumers at some level), and the constitution limits the actions that they can take on behalf of those constituents. I and my fellow free traders believe that, in a society with or without states, free trade is the most economically beneficial policy (and there's oodles of data to support that). We also believe that it's completely immoral for politicians to tax consumers in order to line the pockets of well-connected businesses (and that, after all, is what protectionism is).

2) You're right: no government policy can be perfectly neutral. That's why NO government policy - i.e., free trade among individuals at any and all levels of society - is by far the most "neutral" (or "fair") of all approaches. Government tilts the playing field through force or threat of force. Free trade merely lets me trade with you (or your competitor). It forces no one to do anything. Why should coercion be the default approach? (Hint: it shouldn't.)

3) The state showing a "preference" is merely another way of saying the state picking winners (protected American businesses) and losers (American consumers). And, again, that preference is exercised at gunpoint. I, and my fellow libertarians, seek a government preference for freedom, in particular free trade (which, again, has proven to be, by far, the most economically just and beneficial approach).

4) If you think that my blog post was ridiculing Fletcher's protectionism, I'm sorry, as that actually wasn't my intent (this time). Instead, I was ridiculing his blog post, which, other than one conclusory sentence about "ruthless" global competition, was nothing more than jingoistic name-calling.

Well, I responded to your original formulation, but I actually think the second, corrected version is worse: politicians are not supposed to be "in the business of protecting state interests." They're in the business of protecting INDIVIDUAL (constituent) interests, and free trade is in the interests of almost all individuals.

I'm reminded of a great quote from Milton Friedman (recently reminded to me by Cato's Michael Cannon in a recent blog post):

IN A MUCH QUOTED PASSAGE in his inaugural address, President Kennedy said, “Ask not what your country can do for you — ask what you can do for your country.” It is a striking sign of the temper of our times that the controversy about this passage centered on its origin and not on its content. Neither half of the statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society. The paternalistic “what your country can do for you” implies that government is the patron, the citizen the ward, a view that is at odds with the free man’s belief in his own responsibility for his own destiny. The organismic, “what you can do for your country” implies that government is the master or the deity, the citizen, the servant or the votary. To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshipped and served. He recognizes no national goal except as it is the consensus of the goals that the citizens severally serve. He recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive.

The free man will ask neither what his country can do for him nor what he can do for his country. He will ask rather “What can I and my compatriots do through government” to help us discharge our individual responsibilities, to achieve our several goals and purposes, and above all, to protect our freedom? And he will accompany this question with another: How can we keep the government we create from becoming a Frankenstein that will destroy the very freedom we establish it to protect? Freedom is a rare and delicate plant. Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom. Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.

It appears that I have been unclear in what I meant by state ("protecting state interests"). When I used the word "state," I was thinking along the lines of the entire US citizenry, since the US is a representative democracy, and so the state is comprised of all citizens.

I apologize for the lack of clarity. I really should have been more clear in what I was trying to say. Does the clarification in word usage change the gist of your response?

I think it's pretty moot whether or not you think politicians ought to be protecting the interests of native business or of individuals. The thing is Adam Smith pointed out over 2 centuries ago that even if you enact policies which appear to be beneficial to the home-grown business, in the long run it is not the case... so any protectionist policy is self-defeating, no matter what you think the legislature is supposed to do!

You're of course right. But sometimes it's important to step away from the economics and talk about the abject immorality of protectionism, especially in our representative demoocracy of limited and defined powers. Indeed, I've often argued here that, if free traders are ever to convince the public of the "rightness" of their position, they need to ditch the data (for a change) and just talk about how protectionists seek to transfer, through government force, the wealth of one class (consumers) to another, much smaller but better-connnected class (certain producers). Of course, the basic economics (i.e., Adam Smith, etc.) are important too.

Fletcher's second charge against libertarians:2) Libertarianism, for all its pretensions of universalist humanitarianism, is in fact a notoriously selfish philosophy. Someone once defined a libertarian as "an anarchist with a credit card;" they were onto something.

does not follow from his complaint citing Don's beneficent toward a Sour Korean.

If Don, as a libertarian, celebrates improvement in the welfare of extra-nationals, how can it then be claimed that he and libertarians are selfish.

At some point, doesn't it become more insulting to Mr. Fletcher to assume that his inability to comprehend the fundamentals of the free trade arguments is sincere rather than contrived?

I made mention of it on his article, but this could be an example of Mr. Fletcher taking up Don's faux-advice to implement protectionism at an individual level. By erecting barriers to entry in his mind, he is protecting his domestic ideas against competition from foreign ideas. However, just like protectionism enriches some individuals at the expense consumers as a group, protecting his ideas may help them to become more solid in his own mind, but sacrifice overall intelligence.

re: Simon Greyquote: "When I used the word "state," I was thinking along the lines of the entire US citizenry, since the US is a representative democracy, and so the state is comprised of all citizens."

I would submit that there is no singular "state interest" or interest "of the entire US citizenry". We all have competing interests, and in my opinion the best method for resolving them is through voluntary exchange. So long as fraud or coercion aren't involved, the government really shouldn't interfere.

When the government seeks a protectionist "solution", it is interfering in that voluntary exchange, thus favoring one person's interests over another's. That import quota or tariff on foreign steel, for example, might be great for the Pittsburgh steel company and its workers, but not so great for the construction firm forced to pay more for raw materials, the factory forced to pay more in construction costs for an expansion, or the workers involved down the line. It might not even be ultimately best for even the Pittsburgh steel company, as they rely on government interference to protect their business rather than implementing technological innovations or other changes to make them more competitive.

I'm sorry, but I'm going to need you to substantiate this with actual facts and law, because I find it absolutely wrong (and frighteningly so):

What seems to be ignored is that any government, whether totalitarian or democratic, by nature has to pick winners and losers (aka “show a preference”). Also, by nature, any government that exists will have to enforce through coercive measures whatever preference is selected. This is what government does, by definition, which is why in an ideal world the state wouldn’t exist. Therefore, since the government has to pick winners and losers, why is it preferable to pick consumers over producers?

Why does government "have" to pick winners and losers when it comes to trade? Why can't it do NOTHING (i.e., no tariffs or non-tariff barriers)? That's all free traders ask: that, except for very minor exceptions, government get the hell out of the way and simply let me buy from whomever I wish and sell to whomever I wish.

Under such circumstances, the government is not "enforcing a preference," it doing nothing and then enforcing that total neutrality under the law. It is merely protecting its citizens' freedom - i.e., their ability to engage in voluntary, mutually-beneficial transactions (by, for example, prohibiting one producer from stopping me from buying from his competitor, be it foreign or domestic). And as that Friedman quote above makes clear, ensuring such freedom is the primary role of government, not "having preferences" or "picking winners." Until you can prove to me that government MUST be involved in trade, then the rest of your argument is nonsense because the "default" should always be less (i.e., limited) government and more liberty, not more and less. In fact, I'd argue that most of the time that government feels it must "do something," we all end up worse off (and in the case of totalitarian regimes, often dead).

Before you answer, please take a moment to read the blog posts below about the clear immorality of protectionism. They lay out my position much more clearly than these comments will. But I will conclude with this point: your two apparent justifications for government restrictions on my freedom to trade are: (i) government restrictions on US manufacturers' freedom to conduct their business (e.g., through onerous regulations and high taxes) and (ii) the idea that government inherently "must do something." The default of both of these is statism and the coercive deprivation of liberty (and a slippery slope at that). Why not choose the opposite course (i.e., more freedom for US manufacturers and the government staying out of the way and simply exercising its constitutional authority to protect our liberties)? Seems to me that my alternative is the safer, more moral and less costly approach, no?